Steel industry suffers new blow with more job cuts in Sheffield

The steel crisis is continuing to claim jobs in UK industry, with a round of redundancies at Sheffield-based Outokumpu and a warning from its parent company that the UK operations could be closed down.

The Finnish-owned business is consulting with staff about cutting 50 of its almost 600 staff as the steel sector battles lower global demand for the metal in the face of a global slowdown.

Steelmakers in Britain have been particularly hard hit by the crisis, as a flood of imports of cheap Chinese steel arrives in the UK attracted by the pound’s relative strength. Domestic steel-makers also face high energy bills.

Outokumpu has four divisions in the UK and in an email to staff spelling out the difficulties facing the company , chairman Kari Tutti even raised the prospect of shutting down its British operation.

“Outokumpu’s financial performance continues on a very unsatisfactory level,” Mr Tutti said. “The company has made losses for the past eight years and the outlook for 2016 remains challenging.

“The competitiveness of Outokumpu’s UK manufacturing units is also weak and we need to take significant actions in order to improve the competitiveness and to minimise the risk of discontinuation of operations in the UK.”

Mr Tutti said the job cuts would come among the 350 staff in the part of the factory where the steel is melted and in white-collar roles. The defined benefit pension scheme will also be closed and staff moved to a less generous scheme. Pay has also been frozen.

Much of Outokumpu’s work in the UK is on higher value and complex steel products, such as stainless steel. This sort of product had until now been seen as less affected by imports as Chinese plants do not have the technical skills to make such advanced steel.

However, it was revealed in January that Sheffield Forgemasters, which specialises in customised steel parts for energy and defence companies, including components for Britain’s nuclear submarines, was shedding 100 of its 750 staff, raising fears that the crisis was spreading across the industry.

News that trouble in the sector is now moving up the value chain highlights that the crisis is not easing.

More than 5,000 jobs have been lost in the UK steel sector in the past year. More than 2,000 posts went in September when SSI’s plant in Redcar collapsed into administration and Tata has announced a similar amount of redundancies at plants across the UK.